It wasn’t intended as a long-term investment, but the state Employees’ Retirement System looks like it will own two Maui golf courses for more than a decade after a recent bid from a buyer fell through.

Pacific Links Hawai‘i, a company that has been aggressively building a collection of Hawaii golf courses, announced in September that it was negotiating to buy the Royal Ka‘anapali and Ka‘anapali Kai golf courses from the pension fund. But the deal recently fell through.

Parent company Pacific Links International, which uses former professional golfers Greg Norman and Annika Sorenstam as its brand ambassadors, was the title sponsor of the Pacific Links Hawaii Championship that same month at Kapolei Golf Course.

Real estate advisers for the ERS are considering options on what to do with the pair of 18-hole courses tied to Ka‘anapali Resort. A report presenting them is expected in the next few months, and could include operational changes to increase the pension fund’s return on the asset, according to ERS Administrator Wes Machida.

The golf courses are not a troubled asset since they generate a profit for the pension fund. But technically, the ERS is supposed to divest the two courses because of rules governing the fund.

These rules say the ERS shouldn’t hold property acquired in foreclosure for more than five years.

The pension fund acquired the courses at a 2003 foreclosure auction to satisfy a delinquent loan the ERS made to the previous owner of the golf courses and Ka‘anapali Resort developer, Amfac Hawaii.

The fund had loaned Amfac more than $66 million in 1991. The ERS filed a foreclosure lawsuit in 2000 against the company, which filed for bankruptcy in 2002. The foreclosure was later allowed to proceed, and no one at auction was willing to bid more than the $60 million owed to the ERS.

Since then, the fund has run the courses, and even invested $13 million in renovations between 2005 and 2007.

ERS officials applied for and received an extension of the five-year ownership limit from then-Gov. Linda Lingle five years ago, and plans to seek another five-year extension from Gov. Neil Abercrombie before the existing extension runs out in September.

"It is likely that nothing can be done (regarding ownership) between now and September," Machida said.

Last year, an executive with ERS adviser Heitman Capital Management said there are better-suited investments for the fund, and that a sale after roughly 10 years of ownership should result in an overall positive return on the property.

The golf courses represent a tiny fraction of roughly $12 billion in assets held by the pension fund that provides retirement, disability and survivor benefits for 113,282 active, retired and inactive state and county employees.

The fund aims to have 7 percent of its assets in real estate, and the courses are part of that asset class, which has a total value of about $870 million.

A value for the two courses is not disclosed by the fund.

Royal Ka‘anapali is a par-71, 6,700-yard course designed by Robert Trent Jones Sr. It opened in 1962 and has hosted a number of PGA Tour events, including 14 Champions Tour events, the LPGA Kemper Open and the Canada Cup.

Ka‘anapali Kai also opened in 1962. The par-70, 6,400-yard course was originally designed by Jack Snyder and was renovated in 2005 by Robin Nelson.